Buy-side firms in the US are shifting control of dark orderrouting from brokers or other buy-side firms towards a more collabo-rative approach that includes thirdparty analytics specialists, accord-ing to research from TABB GroupA poll of 100 heads of trad-ing revealed an increase in thenumber of buy-side institutionsworking with brokers and third-party analytics firms, to improveexecution quality and dark orderrouting effectiveness.

As of 2015, 56% of US buy-side
firms now take this approach to
dark order routing, compared to
43% in 2014.

The report suggested that theshift stems from the “portability oforder flow across venues in whichundesirable counterparties/liquid-ity readily moves from one venueto the next.”One large asset managerexplained it seeks brokers thathave a data-driven approach whenrouting to dark venues.

Other statistics from the report
revealed a significant shift in the
number of buy-side institutions that
are satisfied with the level of transparency received from their brokers.

In 2014, only 28% of respondents said they were completely satisfied, but in 2015 this increased
to 51%. n

Buy-side continue shifttowards collaborative darkorder routing

Buy-side institutions are less reliant on brokers and
other buy-side firms to route dark orders, opting for a
more collaborative approach.

Position limitsfailures seesHSBC fined $2.5million

Investigation found HSBC
lacked knowledge on
regulatory requirements for
position limits.

HSBC has been fined $2.5
million for failing to identify its
position limits and comply
with regulatory requirements
in Hong Kong.

An investigation carried out
by the Securities and Futures
Commission (SFC) found HSBC
had breached the set position
limit for the Hang Seng China
Enterprises Index (HSCEI)
futures and options contracts.

The limit was breached on 18
occasions between 2014 and

2015.

The SFC said the bank had“failed to identify its positionlimit breaches promptly.”“There were no policies andprocedures in place forposition limit monitoring andcontrols in relation to the HongKong Futures Exchange listedproducts,” it added.

It was also found that HSBC
lacked adequate knowledge
on its position limits in relation
to regulatory requirements and
compliance in Asia.

The SFC said the bank has
now “taken steps to
strengthen its internal controls
on monitoring positions.” n